A Quick Look at Berkshire’s Latest Moves

by Marc Bastow | February 22, 2013 6:30 am

Perhaps the only event anticipated as much as the Oscars at this point in the year is the release of Warren Buffett’s Berkshire Hathaway (NYSE:BRK.A[1], BRK.B[2]) 13F filing[3] that provides details on the firm’s investments.

This quarter’s release, which brings investors up to date on Berkshire’s holdings up to Dec. 31, 2012, provided at least one big surprise and other interesting moves that might provide insight on the Oracle of Omaha’s long-term thinking. Here are the highlights:

Biggest Portfolio Increases

Company

TICKER

change in shares

% INCREASE

Westpac Banking

WBC[4]

+2,472,861

154%

General Motors

GM[5]

+10,000,000

66%

Precision Castparts

PCP[6]

+728,435

58%

DaVita

DVA[7]

+4,481,900

33%

National-Oilwell Varco

NOV[8]

+1,108,000

26%

Source: Whalewisdom

The more than doubling of Berkshire’s Westpac holding is an interesting play, even though it represents a very small (0.35%) portion of the overall portfolio. Among WPC’s features is a juicy 6% dividend yield. The big increase in General Motors is traditional Buffett — at a price-to-earnings ratio of 9, it’s well within the value wheelhouse.

The move in PCP is a bit of a head-scratcher on the surface. It’s fairly expensive at 20 times earnings, and it yields less than 1% in dividends … definitely doesn’t seem like Buffett material there. It is expected to grow solidly in the double digits for the next five years, so perhaps it’s a more aggressive play. That said, it also has great free cash flow (more than $1 billion in the past two years) and a capex profile that could mean growing dividends down the road.

Biggest Portfolio Decreases

COMPANY

TICKER

% DECREASE

Mondelez

MDLZ[9]

59%

Johnson & Johnson

JNJ[10]

33%

Lee Enterprises

Lee[11]

92%

Source: Whalewisdom

Concerning Lee: It’s a little surprising that Buffett sold off so much of one of the traditional (read: print) media business BRK.A still plays in, though perhaps it’s a bit more of a dinosaur than the others, with 47 daily newspapers and 300 weekly newspapers covering mostly the Midwest. The stock has been dead weight for years, shedding more than 60% since 2010. Berkshire’s stake is now down to just $101,000 — don’t expect it to be around much longer.

Mondelez is the snack-business spinoff of Kraft (NASDAQ:KRFT[12]), and Buffett — who owned Kraft before the split to the tune of almost 4% of his portfolio at the end of Q1 2012 — clearly seems to have moved in the direction of Kraft’s North American grocery business. The snack-food biz is anticipated to grow from $60 billion to $77 billion by 2016, so the decision is a bit puzzling. KRFT is expected to grow much more slowly, but it’s a dividend-friendly[13] cash cow that yields well north of 4%, so Buffett’s continued position there is no surprise.

Top 5 Portfolio Holdings:

COMPANY

TICKER

% of PORTFOLIO

Wells Fargo

WFC[14]

19.96%

Coca-Cola

KO[15]

19.25%

IBM

IBM[16]

17.32%

American Express

AXP[17]

11.57%

Procter & Gamble

PG[18]

4.76%

Source: Whale Wisdom

The big news here is that Wells Fargo has taken over the spot held seemingly forever by Coca-Cola. Buffett has steadily been adding WFC to his holdings, increasing his position by 3% in both the first and third quarters, then nearly 4% during the fourth. It’s a great yielder for a financial, at nearly 3%, and the 14% share appreciation in the past year is rewarding Buffett’s interest in the bank.

In With the New

Buffett initiated new positions in Archer Daniels (NYSE:ADM[19]), Verisign (NASDAQ:VRSN[20]), and the aforementioned Kraft. None of these guys compromise a big spot in the overall picture, and in the case of Verisign, it’s a rare tech play for the portfolio. I wonder which of his lieutenants — Todd Combs or Ted Weschler — made that call.

Out With the Old

Nobody got the heave-ho in total during the quarter.

Marc Bastow is an Assistant Editor at InvestorPlace.com. As of this writing, he did not hold a position in any of the aforementioned securities.